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Tuesday, 10 May 16
VOLATILITY? VARIATION NO ENIGMA TO SHIPPING..... - CLARKSONS
 Along with cyclicality, the other characteristic of the shipping markets which receives frequent mention is volatility. This is so evident that the shipping markets are often reported to be many times more volatile than the stock markets or other fluctuating economic variables. Here we take a look at some metrics which shine some light on the relative volatility of the industry.
Measuring The Waves
Many metrics can be used to measure aspects of volatility (though none are perfect). A few are calculated here to compare volatility in the shipping markets with that in the stock and commodity markets. One classic measure of volatility is the ‘coefficient of variation’ which takes the standard deviation of a series over time (a measure of the degree of dispersion of observations in a series) and divides it by the mean (average) level of the series.
Volatile Business
This metric highlights the degree of volatility present in the shipping markets (see graph). For the ClarkSea Index it stands at 50%, for VLCC spot earnings 73% and Capesize spot earnings 104%. For the FTSE-100 the figure stands at 29% and for the S&P 500 43%. The stock markets, often thought highly capricious, appear to be quite a bit less volatile than shipping on this basis (and given that stock markets generally track a trend rather than a cycle, one might have expected their coefficients to be biased upwards). The oil price compares more closely to shipping; the figure for Brent crude stands at 73%. Another useful metric is the average absolute monthly change as a percentage of the mean. For the ClarkSea Index this stands at 8%, for VLCC spot earnings at 26% and Capesize spot earnings 18%. For the FTSE-100 and S&P 500 this stands at around 3% and for Brent at around 6%, so again much lower.
Of course this analysis doesn’t capture everything. It excludes week-to-week (or day-to-day) volatility, though one might suppose that this could further emphasise shipping’s volatility (for example, see VLCC spot earnings on page 2). Equally it does not handle (or ‘de-trend’) indicators differently to account for the fact that stock markets typically follow a long-term trend, rather than a cycle like shipping.
Variation On A Theme?
But, even using a regression approach to ascertain variation from simple trend levels, over 60% of the FTSE-100 movement is explained by the trend. In shipping, much more of the variation appears to remain ‘unexplained’ (less than 10% of the variation of the ClarkSea Index would be accounted for by a simple trend).
Need Good Sea Legs?
So, volatility in shipping easily holds its own against fluctuations in other economic phenomena. It’s a competitive business, and rapid changes in pricing can be driven by the steepness of the supply curve at the margins, as well as a range of quite unpredictable factors. This helps make shipping interesting for asset players and short-term speculators but tricky for investors looking for certainty of return and analysts looking for a clear picture. Like seafarers themselves, shipping market players can quite rightly point to having the stomach for ups and downs as much as anyone.
Have a nice day.
Source: Clarksons
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Monday, 27 June 16
THE BDI UP 3.75 PERCENT ; BCI FELL 1.51% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.75 percent from las ...
Monday, 27 June 16
INDONESIA BANS (AGAIN) SHIPS SAILING TO THE PHILIPPINES FROM INDONESIA
COALspot.com: The Indonesian Transport Ministry strictly prohibited harbour masters issuing permits to all Indonesian-flagged vessels bound for the ...
Friday, 24 June 16
U.S WEEKLY COAL PRODUCTION UP MARGINALLY
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.4 million short tons ...
Wednesday, 22 June 16
SMALL RISE IN SHIPPING CONFIDENCE - MOORE STEPHENS
In May 2016, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). ...
Wednesday, 22 June 16
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Stagnation- With the BDI stuck in the low 600 points for almost a month now, if we had to choose a word to describe the state of the Dry Bulk freig ...
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- Parliament of New Zealand
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- Electricity Authority, New Zealand
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- Baramulti Group, Indonesia
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- Wood Mackenzie - Singapore
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- Ministry of Finance - Indonesia
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- PetroVietnam Power Coal Import and Supply Company
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- Goldman Sachs - Singapore
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
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- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
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- Bulk Trading Sa - Switzerland
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- Intertek Mineral Services - Indonesia
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- Cigading International Bulk Terminal - Indonesia
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- LBH Netherlands Bv - Netherlands
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- Attock Cement Pakistan Limited
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- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
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- Medco Energi Mining Internasional
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- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
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- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
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- Bukit Makmur.PT - Indonesia
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